Nov 22, 2007
Reaction To Budget Reveal
One of my customer reps giggled a story to me yesterday about how a buyer in the first meeting mentioned he’d set aside 15k for his planned purchase. Knowing he could supply for a couple of grand less, he responded with a cheeky ’so you know what our kit costs already?’ and the deal was done to the self same 15k.
I was caught between two opposing views when I was trained up many years ago. One senior rep that I bag-carried for said you must always ask about budgets. I remember the first time he showed me his technique around the money question. We were at a huge diary producer, Kerrygold, and their top bean counter answered without flinching. And when prompted for more detail, he even ran off a report on a thunderous dot matrix printer to show the approved amount. Surreal.
My main mentor though, thought the opposite. ‘You prove the compelling business case, they’ll find the cash’ was his view. I lean towards this approach. Especially nowadays. I sell great stuff, but it can’t possibly be budgeted for as to each prospect it’s a new concept. And anyway, how many sales team leaders (the people to whom I sell) make allocations for ‘non-budgeted spend’?
There is also a school of thought that uncovering budget sums is a qualification tool. This isn’t always necessarily the case, particularly in times of lease popularity and genuine rental arrangements. In addition, many reps live by being able to know the budget so that they can quote just a touch more first time round. It might heighten their game excitement I suppose, but again, I think it pays not to get too hung up about the money.
As I often tell my charges, don’t be intimidated by big numbers. They’re all simply small figures, followed by any number of zeroes.
As a sales manager, I have consistently emphasized with my sales team that is important to address the “budget question” early in the sales process. The purpose of the budget discussion is not to use it exclusively as a qualification tool; although the budget discussion is helpful in defining or determining selling priorities. Rather, the budget discussion helps develop awareness of the budget for strategic and planning purposes.
There are three benefits to having the budget discussion with a prospect or client. First, it enables you to discover if this opportunity is funded. If not funded the selling strategy will most likely be different in that there will need to be a greater emphasis on return on investment and value than if the customer has recognized the need and already budgeted for the solution. Second, if the project is funded, it provides insight into what the purchasing expectations are. If the budget is significantly lower than your product offering, it facilitates the formation of options in the strategic planning and selling process. In this situation, the product offering can be adjusted to reflect budget expectations; the product offering can be maintained and the strategy will be to create a return-on-investment justification; or, the decision to not pursue this opportunity can be justified. Finally, the budget discussion facilitates other dialogue with the client. This provides an opportunity to discuss the competitive landscape, the buying and decision making process, the timing or schedule for purchase and implementation, etc. These are all important components of the budget question.
I appreciate the thought starter; however, I would always encourage sales people to pursue the budget discussion.